Disrupting the Racing Industry, by Founder TK Kuegler

In the startup world, we spend most of our time looking for industries and opportunities that are ready for a “disruption”. While most things in life hate when their apple carts are overturned, the startup world knows that in this friction, growth is what happens. What is even more exciting in the startup world is when an established industry has a disruptive event (e.g. think about how Uber has completely changed the taxi industry). Unfortunately horse racing has often been slow to participate in the exponentially changing landscape of the world’s entertainment opportunities.

For a startup guy like me, this means that there are huge possibilities to make an impact and transform the landscape of the industry. But all of this disruption is going to require new ways of looking at the issues and willingness to experiment, fail quickly, iterate, and try again. We need more people at all levels that want to bring a “startup mentality” to the industry that we love. To have the greatest impact we need to concentrate on the two areas that have the most residual effect on the industry: increasing the handle and increasing the number of owners. Concentrating on these two items can cure 90% of what ails the sport of kings. They are the two bookends of the library that feed an entire industry ecosystem. The fans that make the handle grow are the true customers of the ecosystem. They make the tracks profitable. They increase the purses that feed the entire ecosystem. The owners act as the investors of the system. They make their calculated bets on horses that allow breeders to produce more and up the values at the auctions around the planet.

Let’s start with the handle side of the equation. We all accept the fact that an increased and varied source of handle means that the entertainment industry we are all part of is healthy. Let me share a few general areas ripe for disruption:

• We need to bring new players to the track so they can understand the joys of watching magnificent athletes compete and how they can be active participants in the festivities. Our tracks need to be first and foremost places of entertainment. That is truly the business we are in.
• We need to explore more exotic and large prize multi-track events. Imagine a Pick 10 across ten tracks with a guaranteed prize pool of 20 million dollars. With a carryover, the prize pool could get into the Powerball levels and would attract a whole new level of gaming excitement.
• We need to never stop introducing young people to the joys and inner workings of this game. The math and analysis skills that are learned by reading a form are perfect for STEM education!
• More and varied opportunities for introducing technology into the entertainment aspect of the business are a must. In every way, we need to increase the pace and stimulation of the horse racing experience.

On the owner side of the equation, we have to explain to a broader audience of moderately affluent people that for the money they are spending on other diversions they could become owners in a sports entertainment business where they have the potential for profit and interactivity. A few ideas:

• The growth of syndications and partnerships is a great start. We need more people exploring other creative models to attract horse racing newcomers.
• We need more educational venues to attract those owners who don’t understand the action they can find in aspects of the business.
• At the special venues and meets (e.g. Triple Crown races, Saratoga, Del Mar), we need to make sure that every single person that attends understands that there is an opportunity for him or her to become a horse owner at some level. No other sport lets a fan come in and, for a relatively small amount of money, become a franchise owner.
• Not every new owner can be viewed as a “mark”. We need to make sure that we have as much transparency and honesty in our industry so that newbie owners never feel like they are being fleeced.

These are just my initial thoughts on how to open up the faucet of fandom that will help the financial health of our industry. In the coming issues, I plan to dig in more deeply on specific ideas. Together we will look for ways that we can experiment and see if we can get some of that healthy disruption happening.

TK Kuegler has spent the last 25 years as a startup founder and investor. He is now managing partner of Wasabi Ventures Stables, which is bringing the startup thoughts and ideas to the racing industry.

You can follow TK on twitter: @TKKuegler, and follow Wasabi Stables: @WasabiStables. Check out Wasabi Ventures Stables’ Co-Ownership Club at https://wasabistables.com/faqs.